Purple, a mattress and bedding company, has seen a rise in popularity since its 2015 founding. It joins other successful bed-in the-box companies such as Casper, Saatva and Tuft & Needle. Purple claims they have created the first non-pressure mattress in the world that can adapt to pressure points and keep cool.
Check out our latest Purple Mattress review while you’re here.
Yesterday, the company published its Quarter One results along with transcripts of its earnings call with Terry Pearce, CEO, and Mark Anderson Watkins.
What are the overall results? So far, so goodTerry Peace, a new CEO, was first to take the stage.This growth is primarily due to higher direct consumer demand, which was thanks to large marketing investments and strategic messaging that focused on mattress technology. He says:
We have gained additional insights into the changing competitive landscape and factors that affect the cost of DTC marketing. This has led us to adjust our forecast in order to keep our pursuit for rapid, but also sustainable and profitable growth.
Pearce also announced partnership with Mattress Firm to expand Purple into an additional 73 stores in Q3 which will put them in 190 stores nationwide.
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Pearce, like most honest and self-aware CEOs, also acknowledged the growing pains that the company went through in the past quarter. He pointed out issues with their quality control procedures as well as the production process. Pearce’s team is also working to improve their reporting system and operational data in order to run the business better.
Naturally, CFO Mark Anderson Watson went over more numbers when he took over. He also re-announced their net revenue growth (which was slightly lower than their initial estimates), and he also explained Purples gross profits dollars at million, as opposed to million during Q1.
In reality, their gross margin was lower than expected. Watson says that this was due to two reasons.
We had to make inventory adjustments due to inefficiencies in the quality control and manufacturing process when we increased the production of new mattresses to meet the higher demand. We also experienced higher freight costs as a result of the online launch for the new model mattress. The new models were initially flat packed, rather than being rolled to ensure that we could launch the product by February.
Overall, Purple Hybrid mattress and its Purple Hybrid Purple Hybrid mattresses are continuing to be successful. It will certainly be interesting to see if their success continues as the bed-in a box industry grows.
Pearces says he is confident in their growth.
It is on the rise. It is thriving.
It is very healthy. We’re doing all the right things to keep Purple moving forward. We are proud of our investors and want to help Purple become the success it deserves.
